General Motors to cut Australian workforce by 600

AndrewHarrison

MELBOURNE (MarketWatch) -- General Motors Corp.'s GM Australian unit said Monday it will cut its workforce at its Elizabeth plant, in South Australia state, by 15% by the end of April.

GM Holden Ltd. will offer voluntary redundancy packages to 600 workers at its plant, north of Adelaide, because improved efficiency of its automated assembly line allows the auto maker to maintain production with fewer workers.

The job losses follow a slide in sales of Holden's locally built Commodore range as Australian consumers spurn fuel-hungry six-cylinder cars in favor of smaller, more fuel-efficient models.

"If Holden is to remain as one of the world's most competitive and flexible plants we need to be as efficient as possible," Holden executive director, manufacturing operations, Rod Keane told reporters in Adelaide.

"At this stage we have more resources than we need to achieve that," he said.

Holden announced job losses at a meeting of both blue and white collar workers, who have until March 21 to decide whether to accept redundancy and retraining packages, and later at a media conference.

No jobs would be lost at Holden's Melbourne engine manufacturing plant, Keane said.

In August 2005 Holden, the country's second-largest car seller, shed 1400 jobs at the Elizabeth plant, which currently employs more than 4050, when it decided to end its third shift.

The most recent layoff will leave a workforce of 3450 at the plant and there's no guarantee there won't be further job cuts, Keane said.

"You can't rule out anything in this business, obviously the market changes," he said. "We can never guarantee what the future holds."

In past years the company has invested A$532 million in the plant, which has been promoted by Holden as one of the world's most flexible and efficient plants.

The decision also comes as Holden ends production of the older VZ Commodore range to concentrate on its new VE models, which were designed to be easier to make.

Daily production at the plant, which is running at 620 cars, will fall to 520 cars a day after the layoffs, then back to maximum capacity of 620 cars by October, Keane said.

The plant is scheduled to produce 145,000 cars this calendar year, he said.

The layoffs will embarrass federal Industry, Tourism and Resources Minister Ian Macfarlane, who went to Detroit early last year to tell GM and Ford Ford Motor Co. (F) that Australia expected more in return for the A$7.3 billion Automotive Competitiveness and Investment Scheme that would support the industry to 2015.

"Globally, the automotive industry is going through challenging times and the Australian industry is not immune to this," Macfarlane said in a statement Monday.

"Holden is recognizing this and is making the difficult commercial decisions it needs to make to stay competitive in a tough environment," he said.

The layoffs will hurt the federal Liberal National coalition government in South Australia state, where Holden is the largest private employer, by putting two marginal seats in the area at risk in an election year.

The Elizabeth plant is located in the seat of Wakefield, which is held with a 0.7% margin, while most of the plant's workers live in the nearby Makin electorate, which held by a 1% margin.

The layoffs follow Ford's Australian unit slashing its local workforce by 10%, or 600 jobs, last year after previously announcing it was reducing production at its two plants in Victoria state by one-fifth because of slowing sales.

In 2004 Mitsubishi's local unit shut one of its two plants, putting 1,200 people out of work. The Adelaide-based unit of the Japanese carmaker has furiously denied rumors it's planning to pull out of Australia altogether.

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